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Saturday, Sep 23, 2023

Planning a Strategy Leads to Where the Investors Are

Matt Crowley A few years ago, I used Meetup.com to start an entrepreneur group for my town. I met some unusual folks, but one of my favorites was a PhD in biotechnology. The gentleman had created a cost-effective way to provide research data for the giant pharmaceutical companies. He had customers, but was a one-man band, struggling to raise money or spread his product base. I asked him what he did, which seemed like a pretty simple question. It wasn’t. He told me that it would take too long to explain and I probably wouldn’t understand it. That was his opening line. Imagine being a potential investor and being told that. Practicing your thirty second opener is critical. Your next mission will be to find the watering holes where investors and their advisors gather. For what you are doing, going to a chamber of commerce meeting and running into real estate agents won’t work. The first thing I recommend doing is a quick web search for venture capital forums or associations in your area. I would recommend checking out the free newsletter from Socaltech.com. Its founder, Ben Kuo, is frequently quoted by the San Fernando Valley Business Journal. When attending an event, the most important thing to remember is: we aren’t interested in the speakers. If Michael Eisner is speaking at a group geared toward established, middle-market companies, you aren’t going to meet a soul that can help you find money. Keep your eye on the audience for an event, not the speakers. Breakfast panel events tend to draw the most people. These events are good for catching busy VCs and well-connected service providers who want to network before they start their heavy work schedule. In LA, the Los Angeles Venture Association, or LAVA, is a trade group for startups that hosts monthly breakfasts. A strategy Once you have picked a few events to attend, let’s focus on our networking strategy. The best networkers I have seen work the entire room. Why? You never know when the boring accountant in the corner could be the person who does the audit work for all of a major investor’s portfolio companies. Use the six degrees of separation philosophy and you will find money much faster than if you only approach investors directly. You will want to have short conversations that lead to a reason to meet again one on one. We should be focused on volume, not selling an investor on buying your shares while he eats his chicken wing. Do not worry about where you will sit so you can see the speakers. Dive right in. Remember, if you feel nervous, that’s a good thing. The only time you won’t feel nervous is when you are talking with someone you already know – and that’s a poor use of time because you aren’t really networking at that point. You will want to network on your own. If you bring your business partner, make her work one half of the room while you work the other. This will keep you from spending your time talking to each other. Using this same logic, you should avoid sitting with your business partner. After watching a few networking ninjas in action, I now make it my first priority to locate the bar or coffee table first. Then I walk to the far end of the room away from the bar. Having the bar in front of me as I work my way across the room allows me to politely bounce from conversation to conversation every two minutes. If at all possible, it’s good to know who is going to be in attendance. You will want to look at the speakers list and the board of directors and officers lists for the host organization. After looking at the list, identify your “must meet” people and seek them out. Arrive early, leave late Schedule your time so that you arrive early and leave late. Your goal is to meet as many people as possible, so you need to arrive early and maximize your time, rather than rushing on to your next appointment. Remember to keep some room available on your schedule for the week or two after the event. If you have booked up your calendar so heavily that you have nothing open for two weeks after an event, you might want to reconsider even going to the event since you won’t be able to follow up. Sometimes the key venture capitalist you want to meet is in a group of three that shows no sign of breaking up. What to do? Look around the room for someone with a board of director or officer name tag. Usually this person will help you meet your VIP. When the event is over and you have spoken with all of the stragglers hanging around afterward, your next mission is to follow up with the people you met. Keep your invitation emails short. Now is not the time to send your fifty page business plan or a three-page email telling them why they should invest; the key is to get the meeting. Follow these simple rules and you will have a giant rolodex of people who can help you in a matter of months. Matt Crowley is a veteran venture lawyer who has participated in over $6 billion in deals. He was also on the frontlines during the first dot.com era as a start-up general counsel. He can be reached at matt@crowleystrategy.com.

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